## Facts

- Hardy Farm, Inc., a North Dakota farming corporation, farmed sugar beets in Montana and elsewhere.
- Stockman Bank financed Hardy Farm’s operations, including a large January 2002 note consolidating prior debt and funding 2002 expenses, and an additional August 2002 note for further 2002 expenses.
- Hardy Farm granted Stockman Bank a security interest in personal property including crops and crop proceeds; the bank perfected under UCC Article 9 by filing financing statements in North Dakota and Montana.
- AGSCO supplied agricultural inputs (including chemicals) to Hardy Farm; Capital Harvest financed Hardy Farm’s purchases through AGSCO.
- Capital Harvest claimed an agricultural lien on Hardy Farm’s Montana sugar beet crops under Montana’s agricultural lien statutes (then codified at Mont. Code Ann. §§ 71-3-901 et seq.) and filed pursuant to that statutory scheme.
- Hardy Farm defaulted, and creditors asserted competing claims to Montana sugar beet proceeds; Stockman Bank contested the validity and perfection of Capital Harvest’s agricultural lien and thus its statutory priority.
- In the Seventh Judicial District Court (Richland County), AGSCO and Capital Harvest obtained summary judgment based on agricultural-lien priority; the court denied Stockman Bank’s post-judgment motion, and Stockman Bank appealed.

## Issues

1. Whether AGSCO/Capital Harvest complied with Montana’s agricultural lien procedures so that the lien was valid and perfected, entitling it to statutory priority over Stockman Bank’s prior-perfected Article 9 security interest.
2. Whether the agricultural lien was unperfected because the lien claimant allegedly failed to provide statutory advance notice of intent to file under § 71-3-902(2), MCA.
3. Whether perfection of an agricultural lien required filing a separate UCC financing statement in addition to the statutory agricultural-lien filing.
4. Whether an agricultural lien that was allegedly inchoate or defective at the time of assignment could be assigned and then perfected by the assignee.

## Decision

- The Montana Supreme Court affirmed summary judgment for AGSCO and Capital Harvest.
- The Court held the agricultural lien was properly established and perfected under the agricultural lien statutes and therefore had statutory priority over Stockman Bank’s earlier-perfected Article 9 security interest in the same crop collateral.
- The Court rejected the claim that a separate UCC financing statement was required to perfect the agricultural lien.
- The Court rejected the argument that assignment of an allegedly inchoate agricultural lien defeated enforceability or perfection; the assignee could perfect under the statute.

## Legal Principles

- A Montana agricultural lien that is created and perfected in compliance with the agricultural lien statutes receives statutory priority over conflicting UCC Article 9 security interests in the same crops and crop proceeds, even if the security interest was perfected earlier.
- Perfection of an agricultural lien is governed by the agricultural lien statute’s filing and procedural requirements; courts will not add an extra requirement of filing a UCC financing statement absent statutory text.
- Alleged defects in statutory notice requirements do not defeat lien priority absent a showing of noncompliance that renders the lien unperfected under the governing statute.
- Agricultural liens may be assigned, and an assignee may complete statutory steps necessary to perfect and enforce the lien, so long as statutory requirements are ultimately satisfied.

## Conclusion

The court upheld priority for the agricultural supplier’s financing affiliate because the agricultural lien was properly perfected under Montana’s agricultural lien statutes, no additional UCC financing statement was required, and assignment did not prevent perfection; thus the agricultural lien took priority over the bank’s earlier-perfected crop security interest in the sugar beet proceeds.


Stockman Bank of Mont. v. Mon-Kota, Inc., 180 P.3d 1125 (Mont. 2008)